Question

As you continued your discussion with Maia and Bram, you explain that even small, start-up companies should operate both efficiently and effectively. Although these terms sound similar, each has a different and precise meaning. You walk through a few examples with Maia and Bram to ensure that they have a solid understanding of the concepts. For the following examples, select the word or phrase that best completes the sentence.

Example : A local freight company frequently dispatches trucks that are half full and the crates are often missing their address labels. The company is:

Answer 1

Business efficiency relates to how a company can maximize output with minimal input, such as a messenger company benefiting from lower gasoline prices. Effectiveness refers to achieving the desired outcome, like a large airline using price cuts to eliminate competition. Both concepts are crucial for the success of start-ups and established businesses.

Step-by-step explanation:

When discussing the terms efficiency and effectiveness in the context of startups, it's useful to look at a messenger company example. If the price of gasoline falls, the company can operate more efficiently, because it takes less money to deliver packages. This reduction in costs can lead to increased profits and allow the company to expand its supply of services given the lower operational cost. Expansion might include serving a greater area. In another example, a large airline may exhibit effective competitive tactics by slashing prices temporarily to eliminate competition from a start-up airline. This strategy could be seen as effective in maintaining market control but might not be efficient from a cost perspective in the long run.